Luxury Home Sales in the Hamptons Drop by a Fifth as Market Resets

After three years of rapid growth, activity is finally starting to cool

Sales of mansions in the Hamptons, the summer playground of wealthy celebrities and Wall Street bankers, slid by almost a fifth over the past year, according to a market report released today.

Though best known for VIP residents like Calvin Klein and Martha Stewart, the exclusive seaside resort on the east end of Long Island has long been a favorite holiday haunt of Wall Streeters, linking the health of its real estate sector to the performance of the financial markets.

Sales over the last three years have been particularly strong in the Hamptons, as would-be buyers finally regained enough confidence after the global financial crisis to take the plunge and snap up trophy homes.

However, Hamptons real estate now appears to be cooling, amid saturated demand and market jitters over the U.K.’s unexpected decision to leave the European Union and a slowing economy in China.

As a result, only 57 luxury homes, defined as the top 10% of all transactions, changed hands between April and June, 20% fewer than during the same period in 2015, according to new research by appraisal firm Miller Samuel on behalf of Douglas Elliman Real Estate. Across all price points, sales were also down by around fifth on the year, at 561 transactions.

On the back of slowing sales activity, price growth at the top end was mostly flat, leaving the median cost of a luxury home at $5.5 million. The discount from the original asking price, meanwhile, was 15.6%.

Experts stressed though that this does not mean the market is in for a big price correction and that it’s more of a “reset” after three years of unusually high activity.

“It’s not that the market is weakening, but it was unusually elevated for the last few years, and this is a more sustainable level of activity,” said Jonathan Miller, the chief executive of Miller Samuel and author of the report.

Dottie Herman, president and CEO of Douglas Elliman, added: “The Hamptons market is resetting to a more sustainable level of activity after the rapid pace of the previous couple of years. Even with the slower pace, second quarter sales volume was 25% higher than the 10-year average.”

This followed a recent report by Town & Country Real Estate, a Hamptons-based brokerage, which found that total sales values dropped in nine of the 12 hamlets in the Hamptons during the second quarter of this year.

In East Hampton, for example, total sales values came to $45 million, down from $95 million a year earlier. Southampton was not far behind, dropping 48%, from $86 million to $45 million.

There were some bright spots, however. In the Sag Harbor area, which includes Noyack and North Haven, the value of total sales increased from $23.5 million to $58 million.